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COVID-19 and the Force Majeure Clause

The Kendrick Law Group/Champion Title & Closing is sympathetic to those directly and indirectly affected by COVID-19. You have probably heard mention in the news of “flattening the curve,” “self-quarantine,” or “social distancing.” These practices are meant to help stop or slow the spread of disease and provide health care facilities with enough room and supplies to care for those who need it. An unintended consequence of these practices, however, has led to a downturn in the market. While it is too early to predict the full effect COVID-19 will have on the real estate market, local open houses and closings have still moved forward as scheduled.

If you’re a broker, realtor, seller, or buyer wondering how COVID-19 will affect your contractual obligations in the event of a delay in closing, then a clause that gets little attention in most contracts might be your answer. Like many contracts, standard in the FAR/BAR contract for sale and purchase of real property is a “Force Majeure” clause. Under this clause, a buyer or seller may be delayed in rendering performance due to natural disasters, unusual transportation delays, acts of terrorism, and other events which are not reasonably in control of the buyer or seller. Neither buyer nor seller will be liable to the other for a delay contemplated under this clause. The question becomes does dealing with COVID-19 provide an excuse for delay in performance in a standard FAR/BAR contract – the answer is, maybe.

As it stands, COVID-19 would likely fall into the catch-all part of the clause relating to events which are not “reasonably in control” of the buyer or seller. However, buyers and sellers should consider adding language to this clause clarify that a delay due to COVID-19 is an excuse for delay in performance, if they are worried about such an issue. In theses situations it is advisable to insert language defining what constitutes an excusable delay. There are many considerations that go into drafting a clause covering what would excuse performance. To avoid any potential exposure for inadvertently giving legal advice brokers and agents should seek legal guidance in drafting and interpreting contractual clauses.

The attorney owners of Champion Title and Closing and the Kendrick Law Group are available to discuss your specific situation and tailor language specific to your situation during these uncertain times.

With all of this in mind, Champion Title & Closing is working to keep everyone on schedule while using all possible means to protect our clients and employees during this time. Should you need further advice on how COVID-19 might affect your obligations, feel free to e-mail or call The Kendrick Law Group at 407-641-5847.

#SarahMarottaGeltz #TopLawFirmsOrlando #Closings #TitleandClosing #SarahMGeltz #KendrickLawGroup #SarahGeltz #RealEstateLaw #RealEstate #JessicaKendrick #FloridaLaw #RealEstateAttorney

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